Any chance you could move back into House 2 and avail of a tracker mover product? It's just ok - nothing special - as a rental.
I would be very surprised if House 1 made any sense at all as a rental.
Any chance you could move back into House 2 and avail of a tracker mover product?
You have a huge exposure to property. What are you both doing with regard to pension provision?
Here is the current position:
View attachment 1442
Here is the position after your purchase:
View attachment 1443
Having net borrowings of €410 on a salary of €135k is not excessive in general. In your case, it's not excessive because you can reduce your borrowings by €310k simply by selling houses 1 and 2. A further reason why it's not excessive, is that your repayments on €110k of the borrowings are very small as it's a tracker.
So you are not mad taking on the extra commitment.
You should evaluate each of the investments individually.
I agree with Sarenco - I doubt if House 1 is worth keeping and this is a very good time to sell it. You have been living in it, so it's presumably in good condition. You won't have the hassle of finding tenants. The only reason to rent it is that there would be no Capital Gains Tax on any increase in the value up to the price you paid for it. But this is not that significant an issue to worry about.
House 2 is probably a very good investment at the moment.
Rental income: €7,200
Interest: €1,000 (€110k @1%)
Profit before expenses and taxes: €6,000
I think you should keep this. But review the decision every couple of years. As the equity increases, tracker backed mortgages become a less good investment.
Is the €300k your final house?
This is a very important issue. You could easily afford a €400k house. Obviously there is no point in buying a bigger house than you need, but it's better to overbuy than to underbuy and face trading up again after a few years.
If you do buy a €400k house, you must definitely get rid of House 1. Transferring the tracker from House 2 becomes more attractive than keeping it as an investment as well.
This would be the position:
View attachment 1444
50% LTV and less than twice your income. Very conservative.
You should not be keeping any cash other than around €10k
Why on earth are you keeping €100k in cash? You are probably paying around 3.3% on your mortgage and earning almost nothing on the deposit. You should pay down your SVR mortgage on your home in full.
You should temporarily borrow the maximum allowed by EBS
Let's say you buy a house for €300k.
You should ask EBS for a €240k mortgage
They will give you 2% cash back or €4,800
You should then use your savings to pay down the mortgage without penalty.
House 2 isn't an option to live - wrong area and too small.
Neither property were bought as investment properties we both lived in them before we met, bought were bought around 2006 hence crazy prices.
15% of joint income to pension so should be covered there.
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